Petr Dubinsky

Govt To Tighten FDI Rules For Critical Sectors

The government has adopted a bill to prevent key Czech firms from being taken over by foreign investors.

The law, which still has to be passed by Parliament, is not linked to the measures taken in connection with the coronavirus pandemic.

“The law should prevent the unwanted takeover of critical companies by foreign investors, which would be assessed as risky entities,” the Minister of Industry and Trade said. The law takes the European stance on the issue. It is also being introduced by other EU countries, to protect critical infrastructure. The law is based on European Parliament regulations.

“The purpose of this bill is to lay down rules and procedures for the examination of foreign direct investment to protect the security of the Czech Republic.

Previously, the Ministry of Industry and Trade said the law would allow foreign direct investment by entities from outside the European Union. If the investment is determined to be risky, the state will set the conditions under which it can be made, or prohibit or cancel the investment.

Investments in the most sensitive sectors, such as the arms industry, critical infrastructure, will have to be approved in advance by the government. All other investments may be made without authorization. Still, the state can review them for up to five years retroactively.